Miss. Regulators to Consider Kemper Rate Increase

JACKSON, Miss. (AP) — Utility regulators will be asked again Tuesday to approve a rate increase to repay money Mississippi Power Co. has borrowed to build a coal-fired power plant in Kemper County.

The unit of Atlanta-based Southern Co. wants a total rate increase of 21.6 percent, or $171.6 million. For an average residential customer, that's projected to work out to about $31 a month, on top of what they're currently paying, according to a company filing.

Because Mississippi Power has proposed to lower the amount that it collects for fuel and for other rates, the net effect would be an 18 percent increase. Higher bills would start in April under the company's plan. The Public Utilities Staff, which examines filings, has largely recommended that commissioners concur.

It's the second time that the Mississippi Public Service Commission will be asked to approve a plan to start paying for the $2.88 billion plant, which Mississippi Power calls Plant Ratcliffe.

The PSC rejected the first request, leading to a lawsuit that was settled with commissioners, who could vote on the request Tuesday, but have 10 more days to decide.

The settlement said that Mississippi Power can only include $2.4 billion of the plant's cost, plus the projected $377 million costs of the adjoining lignite mine and pipelines, in a traditional rate structure. Mississippi Power will earn a rate of return — a measure of profit — on the amount included in rates.

The utility, which serves 187,000 customers in 23 counties, plans to sell up to $1 billion in bonds to pay for costs incurred above $2.4 billion on the plant, collecting from customers to pay principal and interest, but not for any profit. That arrangement was blessed in a law signed last month by Gov. Phil Bryant.

Mississippi Power said the bonding will save customers $1 billion over the decades-long life of the plant. The company said it expected to sell $700 million to $800 million in bonds, which would require an additional 2 percent to 4 percent rate increase later.

"Mississippi Power is looking forward to presenting the information that supports our filings and is prepared to address any questions regarding the Kemper facility," spokeswoman Cindy Duvall said in a statement. "The company hopes the commission will take action to lower the overall cost of the projected increase to our customers."

Mississippi Power said Plant Ratcliffe was nearly 75 percent finished and scheduled for May 2014 completion.

Opponents said the plant is an expensive mistake that customers shouldn't have to pay for. The plant would take soft lignite coal and turn it into a gas that would be burned to generate power. Along the way, the plant would extract carbon dioxide and other substances from the lignite, selling the byproducts.

Among those who have legally intervened are Charles Floyd, of Long Beach, and Paula Stewart, of Gulfport. Their lawyer, Robert Wise said the PSC should order Mississippi Power to swallow the $2 billion it has spent on the plant, even if it drives the company into bankruptcy.

"These were the mistakes of executives on the coast and in Atlanta" that customers shouldn't have to pay for, Wise said. His clients argued the company should have built a conventional natural gas plant.

The Sierra Club has been fighting the plant for years, in part because it's against the mining and burning of coal. Sierra Club state director Louie Miller said the club plans to attack the lack of public input in the settlement. He said he believed Southern District Commissioner Leonard Bentz and Central District Commissioner Lynn Posey, both Republicans, are unlikely to be swayed by opponents.

"We're preserving our rights to appeal," Miller said.

The Sierra Club also objects to the settlement because the $1 billion in bonding authorization makes it unlikely that Southern will have to pay for any of the plant itself.

"They have no skin in the game," Miller said. "It's all on the backs of the ratepayers."

There's still some legal uncertainty. Thomas Blanton, a Hattiesburg resident and former PSC candidate, has challenged the constitutionality of utilities collecting for new plants before they start producing electricity. The state Supreme Court has yet to rule on Blanton's arguments.

The Sierra Club is also challenging the Kemper plant's second license, granted after a legal challenge by the club overturned the first one.

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